OSC Alleges Fraud Against Sino-Forest Corporation
and Former Senior Executives

OSC Staff allege that Sino-Forest and members of its overseas management engaged in numerous deceitful and dishonest courses of conduct connected with the purported purchase and sale of timber in the People’s Republic of China. Staff allege that Sino-Forest provided grossly misleading disclosure to investors and that certain former executives attempted to mislead Staff’s investigation.

“This is a complex international investigation and we have dedicated significant resources to this file, moving swiftly to take action against these individuals,” said Tom Atkinson, Director of Enforcement. “This is an important first step and our investigation is continuing into this matter, including an examination of the role of the gatekeepers.”

In its Statement of Allegations, Staff also allege that Allen Chan committed fraud in relation to Chan’s undisclosed interest and substantial benefit in Sino-Forest’s purchase of a controlling interest in Greenheart Group, a public company listed on the Hong Kong Stock Exchange. Additionally, Staff allege that former Sino-Forest Chief Financial Officer David Horsley did not comply with Ontario securities law and acted contrary to the public interest.

Staff acknowledge and appreciate the outstanding assistance provided in this investigation by the Enforcement Division of the Securities and Futures Commission in Hong Kong.

The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices and to foster fair and efficient capital markets and confidence in capital markets. As part of its review of emerging market issuers, the OSC recently issued a Staff Notice that summarizes its expectations for reporting issuers listed on Canadian exchanges with significant business operations in emerging markets.